Before RailAmerica, GWR sees big decreases

Thursday, January 17, 2013

Genesee & Wyoming only experienced a few days of controlling RailAmerica’s rails in 2012 due to approval of the merger by the U.S. Surface Transportation Board that didn’t come down the pike until Dec. 28, and it is the hope that the acquisition will offer improved volume numbers for January. Without RailAmerica, GWR saw a 9.1-percent year-over-year decrease in December traffic — volume fell 7,480 carloads from last year’s total of 74,529 carloads — on its way to a quarter-ending decrease of 16,976 carloads, year over year. GWR's volumes finished the forth quarter down 6.9 percent.
System wide, coal and coke traffic experienced the biggest decrease in December, falling 17.7 percent year over year to 41,553 carloads. Farm and food products, and minerals and stone, also finished the month with significant year-over-year decreases. Planned maintenance to a coal customer in Ohio and a malfunctioning Australian grain terminal led to some of these declines.
Metallic ores increased by 35.4 percent year over year on the strength of GWR’s Australian operations, with petroleum products, auto parts and lumber also showing increases of more than 10 percent.
Winnowing in on just North America, the movement of petroleum products was the big winner for GWR in December, with lumber, auto parts and metals also showing year-over-year increases.
At BB&T Capital Markets, analysts don’t see much broader economic challenges in these negative numbers.
“While this is the 14th straight month of negative same rail carloads, and GWR fell about 8,200 carloads short of guidance, there were company-specific issues for the recent declines rather than broader economic concerns,” the analysts wrote.
They pointed out the lower-than-expected numbers are due to unforeseen declines in coal and farm products mixed with sluggish growth in pulp and paper, which was expected to see bigger increases in activity. However, they also pointed to strong lumber and forest activity as a small offset of the disappointing numbers.
BB&T said RailAmerica's carloads in the fourth quarter exceeded expectations. - Jon Ross